You can’t plan in the face of ignorance
So perhaps AI will steal everyones’ job:
AI optimists acknowledge there will be short-term problems but say that in the longer term there is nothing really to worry about. In the past, every wave of new technology has been accompanied by predictions of machines supplanting humans, but the doomsday scenarios have never materialised. Some sectors suffered and even disappeared altogether but, ultimately, more jobs were created than were destroyed. That’s because humans have used new technology to find more efficient ways to do things, thus raising productivity and boosting growth. An expanding economy provides job opportunities, even if it is impossible to say at the moment exactly where those job opportunities will be.
That’s to get the techno-optimism argument wrong.
The second potential problem is that the jobs destroyed by AI may prove to be better paid than those created. In the past, this has not been the case, with labour-saving machines freeing up humans to do more creative tasks. The opposite could happen this time, with machines doing the clever stuff and humans left with more menial tasks.
No, that’s again wrong. The machines free up people to do “other” jobs. Anything else. We’ve now unused labour, the list of things humans want done is infinite, so that labour can now be applied to things currently on the list but not achievable because of that shortage of labour. Further, once the machines can do it that output, that displaced labour, is of lower value. Because the machines can now do it, in volume, 24/7 and without error. It’s the very process of mechanisation that makes something lower value. Just as that very process of mechanisation makes what’s being made alarmingly cheap - which is, of course, the thing that increases the consumption of humans or, as we can also put it, increases their wages.
Policymakers have less time than they might think to ready their economies and their societies for the challenge posed by AI. They need to concentrate on the three Rs: reskilling, reindustrialisation and redistribution. What’s more, they need to act fast. Otherwise any benefits from AI will be captured by a tiny minority, while the majority battles with the consequences of mass unemployment.
This is also alarmingly wrong. We’ve just all agreed that the machines are about to take all the jobs. Therefore we must expand that sector - industry and manufacturing - where it’s easier for the machines to take all the jobs?
The actual truth here is that we’ve no clue at all - for all that many will claim ideas about it - what is next on that list of what humans want. No, we can’t ask people - that difference between expressed and revealed preferences - we have to watch what happens. There will indeed be more labour available. So, what will humans want done with that labour? We’ll simply have to wait and see. People will experiment, people will try, some things will turn out to be what people want done and others won’t.
That is, the only way through a change like this is market experimentation. The reason planning cannot work - who should be doing what, how, where and so on - is because we’re all wholly ignorant about what it is that people want done with those soon to be newly available labour resources.
Oh, and the idea that the benefits will be captured by a tiny minority? This has actually been studied, by a Nobel Laureate no less. Assume that the machines do everything, all the profits flow to the capitalists. This can only happen - of course - if the output of the machines flows through to the consumer. The result of this is that wages - also known as consumption, of course - rise at 200% a year, each year, off into the future. This is one of those economic outcomes known as “Not a problem”. It’s also the Marxist prediction of capitalism finally solving the production problem.
Which does produce a moment of levity, doesn’t it? The left warning us about the horrors of the arrival of what they’ve all been hoping for this past century and a half.
Tim Worstall